In the Electronics Design Online Issue (
http://www.elecdesign.com/Articles/Index.c...ArticleID=15841 ) there is an article that talks about the probable strategy for Apple TV. In it they quote an analysis done of the costs of building one (not including cables and packaging) and find Apple is only making 20.7% Gross on each unit as compared to 40 to 50 percant for the previous loss leaders in the iPOD range.
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“This suggests that Apple is taking a market-penetration strategy for the Apple TV, rather than the simple profit-per-unit approach it has always used in the past,” said Andrew Rassweiler, teardown services manager and senior analyst for iSuppli. “The Apple TV itself is a very low-cost design, primarily due to its use of a trailing-edge microprocessor. At $299, some have called the Apple TV the ‘cheapest Mac.’ However, based on the minimal microprocessor performance and the application’s scaled needs, it might be better to call the Apple TV a ‘LobotoMac.’”
The strategy is apparent in the design:
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On the inside, Apple TV is a PC with older-generation components, based on a customized Intel Corp. microprocessor—a venerable 1GHz Pentium M that is made using trailing-edge 90nm process technology. The use of the old and slow Intel microprocessor is a major factor keeping down the BOM (bill of materials) cost of the Apple TV, Rassweiler noted. ISuppli estimates the cost of the microprocessor at $40, far less than Intel is charging for its more cutting-edge chips.
“If the Apple TV were based on a more current microprocessor, such as Intel’s CoreDuo or CoreSolo, then the product’s BOM cost would likely match or exceed the retail selling price,” Rassweiler said. “This would represent a major and unlikely strategy shift at Apple, which historically has not sold its hardware at subsidized rates.”
